New Single-Family Build-to-Rent Hit Record High

The build-to-rent (BTR) industry had a record year in 2023, according to data from Yardi’s RentCafe site, as builders and developers completed nearly 27,500 houses for single families.

That was 75% more than in 2022 and three times as many houses as in 2021. The units offered more room than a typical apartment. That was a big plus in pandemic days, when parents and families were often stuck at home. Also, given house price increases, the requisite down payments and 30-year mortgage levels at 7.13% as of April 17, 2024, further drove demand, according to the Mortgage Bankers Association.

That doesn’t seem surprising, given that rent growth is doing far better for house rentals than for multifamily, according to the Rentometer Quarterly Report. Looking at related 3-bedroom single-family-rentals across 755 cities, with rentals between $500 and $10,000, 75% of the metros in question — or about 567 — saw year-over-year increases, with 16% seeing double-digit jumps. Yardi includes communities with at least 50% of units either sharing no walls with other units, or shared walls but no neighbors above or below or have a direct access garage.

Another attraction is that 41% of BTR houses were built in the past five years and thus tend to have modern amenities.

“As a result, the number of single-family homes for rent built every year jumped from an average of 6,600 in the pre-pandemic years to tens of thousands of new units each year after,” RentCafe wrote. And 14 out of the top 20 metros hit 10-year highs.

There are another 45,000 BTR units under construction and expected to hit delivery in the next couple of years. More than half are in the 20 metros that had the greatest number of deliveries in 2023.

Although there are 20 metros with relatively large amounts of construction, three dominate the list: Phoenix had 4,030 BTR units last year; Dallas saw 2,694; and Atlanta had 1,981 completions in 2023.

These three cities also saw the biggest BTR growth between 2018 and 2023. Phoenix had a 310% increase, from 3,012 to 12,357. Dallas saw 161% growth, from 4,042 to 10,554, and Atlanta rose 646%, from 547 to 4,083.

After those cities, numbers drop off quickly. Rounding out a top 10 are Austin, TX (840); Charlotte, NC (714); Detroit (651); Kansas City, MO (636); Columbus, OH (625); San Antonio (587); and Nashville, TN (537).

The concentration by state was also significant. Texas had the greatest number with 4,800, with 56% of those units in Dallas. The other top states were Arizona (4,200); Florida (2,800); Georgia (2,181); and South Carolina (1,909).